Caravan Park Market Review - March 2008 ( 01/04/2008 )
The majority of Tourist Park owners have reported solid increases in
trading for 2007 as a result of what many believe to be the emergence
of a lengthier tourist season. The 2008 tourist season is almost upon
us with it’s commencement contingent on the affects of an earlier than
usual Easter, a well documented wet-season for most of Queensland and
southern weather patterns.
Permanent Parks continue to perform well throughout Queensland, most
notably in areas where there are accommodation shortages such as
mining areas and strong regional centres.
With regards to the major issues of concern to the industry at
present; the issue of roadside stays has been well addressed by the
Caravan Parks Association of Queensland with good progress having been
made. The association also continues to lobby the State Government
regarding Land Tax in the hope that common sense will soon prevail.
Previous concerns over the affect of fuel prices have abated as
current fuel prices are now accepted as the norm.
The Caravan Park Market - Australia’s strong economic conditions have
placed considerable inflationary pressures on the RBA of recent times
with interest rate increases failing to slow the economy at present.
These increases (most significantly 7 in the last 3 years) have had an
easing affect on the Caravan Park market most notably in the past
12-18 months. It is generally accepted that expected yields/returns
reflect the RBA’s cash rate at any given point in time (currently at
an 11 year high of 7.25%). It would be fair to say that Interest Rate
increases have seen some buyers drop out of the market and others take
a more conservative approach to acquisitions.
Having said all this, current yields/returns from a vendor’s
perspective are still extremely low in comparison to where the market
was 3-4 years ago. This is allowing those presently selling or looking
to sell to maximise their sale prices as the good news is there are
still more buyers than sellers.
It would however be premature to say interest rates have peaked and
that Caravan Park yields/returns will remain where they are as the RBA
expects inflation to continue rising in 2008 before cooling in 2009.
The next batch of inflation data is due in May with analysts
forecasting another 25 basis point rise at that time.
Buyer expectations will continue to mirror interest rate increases or
decreases as they seek to maintain a fair and reasonable gap between a
purchasing yield/return and the borrowing interest rates ultimately
imposed by the banks.
For any owners wishing to discuss the market at present or for an
obligation free appraisal on the value of your Park please do not
hesitate to call one of our experienced brokers.
